IndicesTechnical Analysis

Market Top?

I began putting the DANGER signal on my Special Alerts to “alert” everyone to Danger (duh). I know this stage of the market well as I have seen it time and time again in many different markets. As I said over and over, “the job of this rally is to draw in as many players as possible” (and then give them a thorough drubbing for being so foolish). There were two “turning points” to potential tops (August 7 and mid September). Both were tops, but only temporarily (very temporarily).

MARKET TOP ? (The title of this article), I can?t get much more “up front” than that it means that everything I was looking for to produce a market top had occurred and that anything beyond that would send me back to the drawing board. I now think the odds are strong that we will now see what I have alluded to in the 40 year cycles i.e. “every 40 years or so something bad happens” ? “every other 40 years (every 80 years) something really bad happens.”

In my view, we are entering a very dangerous time where extraordinary steps have to be taken. If you are glued to the TV set to expect to be led to safe harbors, then you are very likely missing the point. The talking heads didn?t warn you of the top in 2000; they didn?t warn you of the top in 2007 and they haven?t warned you now. Why? Because they have no basis to make such a warning and the next top they call will be their first.

If you have not memorized the Sequence of Events in the Cycle and are not seriously paying attention to where we are in this cycle, you may be making a serious mistake. This is not a time to buy into the propaganda. This is a time where the following suggestions 1) get your safe money safe. “Safe” may require a lot more thought than what you may be thinking. 2) After you get into a safe custodian, then worry about the vehicles.

I have a friend who constantly tells me to tell my readers where to put a stop. I have hesitated from doing that because I have a very smart readership that knows that “discipline is more important than brains” at least, when dealing with the stock market. My view is to protect profits with trailing stops no matter what direction the market is headed. If you got short last week, then a stop at the 1100 resistance would make sense. If you want to give it a little room, then 1105. If you are more aggressive, then a lower number will work.

In looking at the short term, partner Peter Eliades shares “Today?s advance/decline numbers so far bring the ratio adjusted McClelland Oscillator to under 100. After the August 25, 1987 top, 9 trading days later the ratio adjusted McClelland Oscillator read 102.8″ It made a short term bottom there. We may be close to such a bottom, but let?s not lose sight of the fact that the risk is to the downside.

THE LINE IN THE SAND

Looking at the following chart, the market is confined by the tops line which is now approaching the 1100 resistance level, strengthening both as barriers to the market on the upside. The Line to watch is the Red line that is the “line in the sand”. If it is broken now, we go down and possibly, sharply. The next turning point target is November 13. The market is short term oversold and it would appear likely to rally into the 3rd or 4th of November and then have a decline that cleanly breaks the Red trend line. The rally back up to 5 and C is a best case scenario. My strong belief is that the top is already in (October 19th close and October 21st intraday)

The following chart shows the market getting support right here and a rally into November 3rd or 4th. That would be ideal with other technical work that I have however, ideal doesn?t always happen, so the key now is risk avoidance. The caveat is that we may just go down from here. The break of the trend line is the key. Otherwise, we have a down up move now and, hopefully, another such move from the November 13 time frame. After that bounce (if it happens), I expect a very hard move to the downside.

Garrett Jones is president of Montgomery Investments, Inc. and is a partner with Peter Eliades in Stockmarket Cycles Management, Inc.  He is also affiliated with Hillier Capital Management. He initially entered the industry as one of only ten people annually accepted on a worldwide basis for Merrill Lynch’s prestigious JET program in 1970.  He has been instrumental in building up three successful money management firms during his career.  Mr. Jones began buying gold stocks for clients when gold was selling at $35/oz. and sold near the highs in late 1974.  In 1978, he became vice president with Guild Investment Management, Inc. -- one of the first money management firms in the US to specialize in international asset allocation – including gold, currencies and foreign markets, in addition to the US markets.   While with Guild, he again caught the move in gold and currencies and was instrumental in selling gold at $864/oz. on the precise day of the all time high.During the 1980s, Mr. Jones formed Evans & Jones with Don Evans and was a pioneer firm in market timing utilizing mutual fund switching.  In 1990, Mr. Jones assisted in the founding of FX 500, Ltd., a firm utilizing S&P 500 futures contracts as an investment and hedging vehicle.  In a matter of a few years, FX 500 Ltd. became the largest domestic firm trading exclusively in S&P 500 futures contracts – trading as many as 4,000 contracts per trade when the full size contract was $500 per point.Mr. Jones developed a proprietary trading system that received national recognition in the US Trading Championship with a return of 98.6% for the 4th quarter competition in 1989.  He found the system to be highly effective in the currency and precious metals markets. He is recognized as an expert in Long Wave Economic cycle analysis and has been a featured speaker at a number of international monetary conferences both domestically and abroad.  His knowledge of the cycle in conjunction with his system allowed him to accurately forecast the market top in 2000. He has written numerous articles for domestic and international financial publications and is in the process of writing a book on the Long Wave economic cycle.

Garrett Jones is president of Montgomery Investments, Inc. and is a partner with Peter Eliades in Stockmarket Cycles Management, Inc.  He is also aff...

salvadorveiga

Active member
228 5
altough i agree what kind of count is that... wave iv of the 3rd of wave C intersecting wave i?

that could only happen on an ending diagonal or leading diagonal not during a 3rd wave extension...
 

MainCycleV

Junior member
43 5
altough i agree what kind of count is that... wave iv of the 3rd of wave C intersecting wave i? that could only happen on an ending diagonal or leading diagonal not during a 3rd wave extension...
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This (A-B-C) is just a reaction wave, not a five-stage impulsive wave, so it is ok that wave iv of the 3rd of wave C intersects wave i.
I think the market is in GSC4, and is going to be the third wave of GSC4, its target will be 471.
 

salvadorveiga

Active member
228 5
altough i agree what kind of count is that... wave iv of the 3rd of wave C intersecting wave i?

that could only happen on an ending diagonal or leading diagonal not during a 3rd wave extension...
 

salvadorveiga

Active member
228 5
yes ABC is not an impulse, but Wave 3 of C is definitely an impulse... well either way our views are similar. it's just the count that is incorrect but in the larger strcture we share the same.

Either this will be a primary 3 or a C I too am expecting a drop larger than last years. Since it's a 3rd wave it should go longer than the 58% decline of Primary 1. We'll see...
 

Black Swan

Legendary member
5,613 833
markets can stay irrational longer than you can stay....etc....IMHO the only folk I'd take seriously predicting a major long term trend swing would be those who have the power to move the markets and then it may be advisable to do the opposite of what they let out/pump into the public domain....
 

meanreversion

Senior member
3,398 535
I was at a talk on Elliot Waves at the STA in London a few weeks back and it struck me that they're always looking for something dramatic. The whole process is far too subjective for my liking, and it doesn't naturally lead to a balanced trading strategy.
 

salvadorveiga

Active member
228 5
meanreversion, EW'ers have been calling for something dramatic because the model says so... but no one remembers at the middle of the 70's when everytone was thinking doom and gloom, many EW'ers called for the greatest bull market ever to be seen.

Anyways apart from that today's price action seems to confirm ~P3 is underway, still not 100% but probability is very very high... i have my own update at www.mybullmarket.org maybe mr Garrett Jones could drop by and see my counts too.
 

MainCycleV

Junior member
43 5
markets can stay irrational longer than you can stay....etc....IMHO the only folk I'd take seriously predicting a major long term trend swing would be those who have the power to move the markets and then it may be advisable to do the opposite of what they let out/pump into the public domain....
===================================================================Those people who have the power move the market can just affect the markt in a very short term, the long term trend can not be controlled by any one, it goes with the natrual law.
 

glide

Junior member
21 4
I see a combination of technicals and fundamentals, let's face it, good US GDP figures are thanks to public money and continued intervention. Technically, looks toppy with selling opportunities along the TLs (accummulating). But then, I just trade what I see, not what I think. SO far has served me well. GT
PS. Risk aversion currencies often indicate pre move